The naira closed February 2025 with an 8.5 percent month-on-month gain in the parallel market, settling at ₦1,490/$.

However, it weakened in the official market, closing at N1,500/$, reflecting a 1.7 percent month-on-month decline.

According to the Afrinvest Monthly Market Report, the country’s foreign reserves dropped by 3.2 percent month-on-month, standing at $38.46 billion as of Thursday.

“This decline can be linked to CBN’s efforts to stabilise the naira, particularly through the resumption of payments for the verified portion of the outstanding $7.0bn foreign exchange backlog,” the analysts noted.

Looking ahead, they projected that “in March, we anticipate the naira will maintain its positive performance across FX segments, supported by the CBN’s continued USD supply to BDCs and DMBs, provided there are no adverse market shocks.”

In the foreign exchange market, the naira has shown mild strength against the dollar, hovering around the ₦1,500/$ mark across both market segments in recent weeks.

Highlighting the factors influencing the market, Cowry Asset Research noted that in the past week, Nigeria’s oil benchmark, Bonny Light crude, remained weak in the international oil market, dropping by $2.36, or 3.2%, week-on-week to close at $75.88 per barrel as of Thursday.

“This decline was primarily driven by weakened global demand, which weighed on crude prices across the board. The sustained pressure on oil prices resulted in lower dollar inflows into Nigeria’s economy, directly impacting the nation’s foreign exchange reserves. As a result, forex reserves declined by $240m, or 0.61 per cent week-on-week, reflecting weaker oil earnings and highlighting the persistent foreign exchange liquidity challenges facing the country.

“At the official window, the local currency appreciated marginally by 93 kobo against the greenback, closing at N1,500.15 per dollar. Meanwhile, at the parallel market, the naira gained N5 to settle at an average of N1,490 per dollar as demand pressure eased slightly.”

Looking ahead, the analysts stated, “In the coming week, we anticipate a continued battle for stability in the forex market as the apex bank intensifies efforts to defend the naira. With the CBN expected to take more decisive steps to support the local currency, including tightening liquidity and enhancing forex supply mechanisms, the naira could gain further ground against the dollar in the coming week.”

Experts have previously pointed out several challenges threatening the naira’s stability, including a rising debt burden, a sustained decline in foreign reserves, and high inflation rates.

They argue that these factors could undermine the potential benefits of ongoing foreign exchange reforms.

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